Our objective is define the initial, intracellular events of glucocorticoid hormone action and steroid hormone action in general. Such studies are of current relevance since steroid hormone receptors are arguably the best understood regulators of eukaryotic gene transcription. The first step of steroid binding to the intracellular receptor is followed by activation of the receptor-steroid complex to a DNA-binding species that associates with those nuclear acceptor sites involved in the regulation of transcription of selected genes in specific cells. We have concentrated on the binding of ligands to glucocorticoid receptors (GR) and how the activated receptor-steroid complexes influence gene transcription. A long standing conundrum of GRs has been why the steroid binding domain is active in chimeric proteins but not in isolation. For this reason, the boundaries of the steroid binding domain have not been delineated. Using a variety of receptor deletion constructs that were fused to beta-galactosidase or dihydrofolate reductase, we identified amino acids 550-795 as being the boundaries of the steroid binding domain of the rat GR. Surprisingly, however, plasmids encoding just the steroid binding domain did not yield stable proteins although the DNA was being transcribed, as shown by a transcription competition assay. Thus, contrary to the generally accepted view, the steroid binding domain of GR is not independently functional. These results also revealed the importance of protein stability and protein folding when constructing mutant receptors. Such mutant proteins have been widely used in transient transfections to construct the current models of steroid hormone action. We also found that several induction properties of steroids were not constant but varied with the concentration of transiently transfected GRs. Thus, the percent of maximal induction for subsaturating concentrations of glucocorticoid was dramatically increased, and antiglucocorticoids were converted into partial glucocorticoids, simply by increasing the cellular concentration of GRs. This phenomenon was specific in that the A form of the chick progesterone receptor was without effect under the same conditions. These variations demonstrate that caution should be exercised in making mechanistic conclusions based solely on experiments conducted with transiently transfected GR. Collectively, our findings contribute to our long term goal of defining the action of steriod hormones at a molecular level and of understanding their role in human physiology.